Raleigh recruiting startup EmployUs to launch service this fall

Raleigh startup EmployUs, which recently raised $500,000 in funding that will enable it to launch its new service soon, is looking to rewrite the rules of engagement when it comes to companies recruiting new employees.

“We’re going to be the Uber of recruitment,” said co-founder and chairman Jeff Stocks, who previously owned and led the Manpower staffing office in Raleigh. “This is disruptive technology.”

Following a beta test that it deems a success, EmployUs is gearing up to launch its software-based recruitment platform in the Triangle this fall, followed by expansion into two or three other cities early in 2016, said CEO Ryan O’Donnell. Stocks, 61, and O’Donnell, a 22-year-old recent N.C. State University graduate, formed EmployUS last year.

EmployUs provides a new way for companies to recruit employees, based on the premise that personal referrals are the best source of talent for corporate recruiters.

The company, which has four full-time employees and four part-time and contract workers, plans to raise $250,000 more, according to a filing with the Securities and Exchange Commission. O’Donnell confirmed the amount raised but declined to discuss future fund-raising, citing SEC regulations.

EmployUs “has a big potential upside,” said David Gardner, general partner at Cofounders Capital, the Cary venture capital firm that led EmployUs’s funding. “It’s so hard to make a quality hire today and the cost of making a bad hire is so expensive.”

Gardner added that many companies are chafing at the cost of using recruiting agencies, which makes EmployUs’s less-expensive service attractive.

“This is the right thing at the right time,” he said.

In essence, EmployUs is designed to make it easy for companies to extend in-house recruitment programs that pay employees cash bonuses for successful referrals to non-employees.

Companies that agree to pay such bonuses to people outside the company can post job openings with EmployUs for free. The bonuses they offer provide incentive for people to download the EmployUs app, peruse the postings and refer their friends. Those friends, in turn, ultimately decide whether they want to apply for the job or pass on it.

EmployUs earns a fee from the company when a referral is hired.

The company, which last year went through the Citrix Startup Accelerator Innovators Program, has been running a beta test involving more than 50 local companies that offered cash bonuses ranging from $500 to $10,000 per hire. More than 1,000 people – O’Donnell calls them “connectors” – have made referrals.

Business software company Citrix is among the companies participating in the beta test.

“We believe it’s a game-changing technology that is easy to use and that will reach a larger network of candidates than typically we can reach on our own,’’ said Diane Johnson, senior manager for talent acquisition at Citrix.

Citrix posted about 10 jobs with EmployUs and ended up hiring two people the company found thanks to “external referrals,” Johnson said. Citrix paid a cash bonus of $3,000 for one of those referrals and $2,000 for the other.

“I think that’s pretty good – a 20 percent hit rate – on a pilot that we’ve only been doing … about 8 to 10 weeks now,” she said.

Johnson doesn’t expect EmployUs to eliminate the need to work with recruiting agencies, but she sees it as a valuable complement that can reduce the need for such engagements and save money in the process.

Still, she said, the prospect of reducing costs isn’t the primary selling point for EmployUs.

“I’m doing it to build a bigger network and to meet more talented individuals that are interested in working at Citrix,” she said.